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RTA - Definitions - Tenancy Agreement. Fuamba et al. v. Irving et al.
In Fuamba et al. v. Irving et al. (Div Court, 2024) the Divisional Court allowed an appeal is a messy real estate transaction that in part had a fresh tenancy aspect (though rent amount was ambiguous) and ended up before the LTB on non-payment issues. The case is interesting as this court 'kicked' it all back to the Superior Court under the RTA s.202(1) ['Real Substance of Transaction'] and s.207(2) ['Superior Court Jurisdiction'] provisions.
Here the court touches on the interaction between the RTA and the Statute of Frauds:[13] A valid tenancy agreement must contain certain basic elements. In 3670490 Canada Inc. v. Charles Boushey Limited, [2000] O.J. No. 4861 (S.C.), that court stated that a formal written lease agreement is not required under the Statute of Frauds, ....
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Issue 2: Did the Board Members err in relying on evidence which pursuant to the Statute of Frauds has no force and effect?
[23] It is trite law that a tenancy agreement may be in writing, oral or implied: see RTA, s. 2(1).
[24] While the Statute of Frauds requires that an agreement which purports to create an interest in land be in writing, this does not trump the specific statutory provision under the RTA that allows for oral or implied leases that are not in writing. As previously stated, the real issue is if the parties reached an agreement on the essential terms of a tenancy agreement: see 3670490 Canada Inc. above.
[25] I do not agree that because the draft lease included provisions about an option to purchase or a right of first refusal, that this somehow invalidated the draft lease prepared to by the landlords.
[26] In my view, it is more significant that the tenants never agreed to the draft lease, that they clearly objected to the proposed rent and that the essential disputed terms of the bargain between the parties was never properly reduced to writing and not put in evidence at the Board hearing. . Fuamba et al. v. Irving et al.
In Fuamba et al. v. Irving et al. (Div Court, 2024) the Divisional Court allowed an appeal is a messy real estate transaction that in part had a fresh tenancy aspect (though rent amount was ambiguous) and ended up before the LTB on non-payment issues. The case is interesting as this court 'kicked' it all back to the Superior Court under the RTA s.202(1) ['Real Substance of Transaction'] and s.207(2) ['Superior Court Jurisdiction'] provisions.
Here the court considers the elements of a 'tenancy agreement', that the RTA "does not confer jurisdiction on the Board to determine whether there is a valid tenancy agreement" - and thus the 'kicking upstairs' to the Superior Court of the entire case:[12] The RTA does not confer jurisdiction on the Board to determine whether there is a valid tenancy agreement. The existence of a tenancy agreement is presumed: see O’Brien v. 718458 Ontario Inc. (1999), 25 R.P.R. (3d) 56 (Ont. Gen. Div.), at para. 19; Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at para. 12.
[13] A valid tenancy agreement must contain certain basic elements. In 3670490 Canada Inc. v. Charles Boushey Limited, [2000] O.J. No. 4861 (S.C.), that court stated that a formal written lease agreement is not required under the Statute of Frauds, however, the essential elements which included rent had to be agreed upon. At para. 31, Polowin J. sets out the essential elements that are required to support a valid lease agreement:The case law also sets out the essential elements of a valid lease agreement. To be valid, an agreement for a lease must show:
(1) the parties;
(2) a description of the premises to be rented;
(3) the commencement of the term;
(4) the duration of the term;
(5) the rent (if any); and
(6) all the material terms of the contract not being matters incident to the relation of landlord and tenant, including any covenants, exceptions or reservations. (see for example Londos Investments Ltd. v. 353573 Ontario Ltd., [1988] O.J. No. 7 (Ont. H.C.). ....
[39] In the end, the tenants accepted that it was their intention to become tenants and that once the property was sold, that they were tenants. However, the terms of their tenancy were not agreed to by the parties and the Board erred in law by coming to the conclusion on the legal rent in the absence of proper admissible evidence that such an agreement was reached. As previously stated, the Board’s conclusion is tantamount to a finding that the tenancy agreement was for the legal rent to be whatever amount the landlords put in their draft lease. It was an error of law for the Board to have failed to fully explore this issue and come to the illogical conclusion that the terms of the draft lease governed simply because the tenants did not move out of their 15-year-old family residence. This was all due to the landlords’ failure to properly set out the terms of the tenancy in advance of the closing date. The Board’s conclusion of a valid tenancy agreement at a legal rent of $5,500 per month was based on an absence of admissible evidence and illogical factual findings when considering the evidence before the Board.
[40] I come to this conclusion with the understanding that the Appellants have been residing in the Respondents’ residence for almost three years. Even when accepting the Appellants’ claimed rental rate, arrears of rent would be in excess of $60,000. It is for this reason that the entire dispute must be put in the hands the Superior Court of Justice given that the full picture surrounding these various transactions and the various actors involved must be considered together for adjudication purposes.
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Conclusion
[45] For the reasons set out herein, the impugned decisions are set aside as I allow the appeal on the following grounds:a. The Board did not have jurisdiction over the matters at issue and the issues should have proceeded before the Superior Court of Justice as part of civil action no. CV-23-93847.
b. The Board erred in determining that there was a valid tenancy agreement with a legal rent of $5,500 per month. In doing so, the Board failed to discharge its statutory duty pursuant to s. 202 of the RTA.
c. The Board erred by making judgment against Faith Fuamba, Naomi Fuamba and Joyce Fuamba. [46] Furthermore, for the reasons stated herein, issues raised in this dispute are more properly dealt with as part of the civil action no. CV-23-93847. This includes the obvious issue of the Appellants obligation to pay some rent. ....
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